Atlantic Computer Case Study

Atlantic Producer, a servers and high-tech products manufacture, currently has a traditional and a basic server market. While they are the market leader for traditional servers, and have been around for over 30 years, they are trying to crack into the new and quickly growing basic server market. With the evolution of technology drastically changing customer demands, Atlantic Producer is hoping their “Atlantic Bundle” of the Tronn server and PESA software tool (capable of speeding up the Tronn server by 4 times its regular speed) is successful in helping them grow their basic server market share. The Tronn service line had been developed to specifically meet the emerging U.S. marketplace but they felt the Atlantic Bundle was the best way to introduce it to the market. Atlantic Producer identified High Performance Servers (supply chain management, enterprise resource planning, business intelligence, etc.) as the largest market segment. They were capturing 20% of this segments revenue market share and it was expected to demand approximately 200,000 units next year and is projected to grow around 3% annually the following two years. They had the belief that companies were increasingly needing basic computing capability to perform simple, repeatable tasks, and that this particular market should demand roughly 50,000 units in 2001, while registering a 36% compound annual growth rate through 2003. All of this information is great, but it doesn’t mean anything if the pricing isn’t spot on. This is where Jason Jowers comes into pay. He has been tasked with the responsibility of creating a competitive pricing strategy for the “Atlantic Bundle”. He needs to decide on doing one of the following before the SME trade show:

1. Continue with status quo (allowing PESA software to come free with purchase of Tronn)

2. Use competitive based pricing (Charge customer four times more than competition)

3. Charge a price based on cost-plus pricing (Based on software tool’s development costs)

4. Charge a price based on value-in use pricing

P.E.S.T Analysis

Political

• Employment laws

• Current and future industry legislation

• Regulatory bodies and processes

• Government patent & trade secret policies

• Anti-trust laws

• Political stability

Economic

• Home economy situation and trends

• Taxation issues specific to product/services

• Business market and trade cycles

• Specific industry factors

• Market routes and distribution trends

• Customer/end user drivers

• Interest and inflation rates

• Amount of cash flow & discretionary income

Social Economic

• Lifestyles & buying access trends

• Consumer demographics, attitude & opinion towards product, and buying pattern

• Media views towards advertising and publicity

• Law changes affecting social factors and how company aligns with them

• Brand, company, and technological image

• Major events and influences

Technical

• Technology access, licensing, patents

• The development of the competition and successfully identifying them

• Future Innovation potential

• Research funding towards continued advancement

• Replacement technology/solutions

• Maturity & replacement of obsolete technology

• Capacity & competence of manufacturing

• Efficiency of logistical procedures and internal & external communication

• User friendliness of consumer buying mechanisms/technology

S.W.O.T Analysis

Strengths

• Atlantic Computer has great brand image with loyal customers. They have a successful track record of operating with solid customer service which results in repeat business.

• Atlantic has a thirty year track record in the computer industry, while claiming twenty percent overall market share

• Atlantics offering was the best long-term investment offering. A customer could receive the same level of performance by buying one Tronn loaded with the PESA as compared to buying four basic servers.

• The Atlantic Bundle offering will lower annual electricity chargers, have fewer software licensing fees, and will have lower labor costs, which could lower product asking price.

• A customer could get the same level of performance by buying the Atlantic Bundle package vs buying four basic servers.

Weaknesses

• Atlantic Computer does not offer online purchasing, while their biggest competitor Ontario generates the majority of their sales online.

• Little experience in the basic server market

• The strong tradition and loyalty Atlantic has is a valuable tool. However, if their employees aren’t willing to adapt, it can also work against them. As they enter new market segments and change the way they have done business in certain areas, they may encounter resistance from their employees.

• Sales agents have never charger for software tools in the past

• When comparing price, customers might not see the long term benefits of the Atlantic bundle

Opportunities

• Could grow considerably if they can crack into online purchasing market share

• Added revue if they charge for the PESA software tool

• If